Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, October 5, 1995 TAG: 9510050056
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
``The time has come to put this issue behind us and move forward,'' Gilmore said. He had hinted after the Sept. 15 ruling that requests for a rehearing or an appeal to the U.S. Supreme Court probably would be futile.
``There really wasn't a whole lot of room for the state to appeal,'' said Michael J. Kator, lawyer for the retirees. ``I'm delighted to hear they've finally given up the ghost.''
More than 14,000 federal military and civilian retirees are due nearly $80 million in refunds on taxes collected under a scheme that was declared unconstitutional by the U.S. Supreme Court in 1989.
Another 153,000 pensioners agreed to a settlement last year that will pay them or their survivors refunds totaling $308 million - about 76 percent of what they claimed they were owed - over five years.
Gilmore also said he will file court papers opposing Kator's effort to collect 10 percent of the refunds as his fee. Kator has requested a hearing on the matter in Alexandria Circuit Court.
``I think it is outrageous that Michael Kator would seek to further delay the resolution of this matter and increase the interest expense to the state,'' Gilmore said.
He said he also believes it is unfair for Kator to try to collect a fee from all federal retirees, not just the 130 who filed the suit.
``That money belongs to the retirees, and I will work to see that they get it,'' Gilmore said.
Kator said such comments are ironic considering the state's refusal to pay full refunds until ordered to do so by the state's highest court. He also said he is not asking too much.
``As fees in these cases go, 10 percent is about the lowest I can think of,'' Kator said. He listed several other states where pensioners' lawyers collected fees ranging from 14 percent to 33 percent.
Gov. George Allen said in an interview that retirees cannot be paid until the dispute over lawyer fees is settled.
``Certainly, we want to pay those folks who won the case ... as soon as possible,'' Allen said. He said he did not want ``interest running on the debt.''
Allen said he was unsure where he would find the money.
``Clearly, there will have to be some reordering of expenditures of the state,'' Allen said. ``I do have authority as governor not to wait around ... and to get this done as quickly as possible. There are ways of doing it that I don't think will be harmful to the most important responsibilities of the state - education and law enforcement.''
Virginia was one of 23 states affected by the U.S. Supreme Court's ruling in a Michigan case that states could not tax federal retirees while exempting state and local government pensions.
The General Assembly changed Virginia's scheme immediately after the ruling, but federal retirees sued for refunds of taxes paid since 1985.
by CNB